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Do performance reviews work?

The status-update era is changing the annual performance review. But the question reamains: Do performance reviews work?

For most companies, employee reviews are still an annual rite of passage. Some 51% of companies conduct formal performance reviews annually, while 41% of firms do semi-annual appraisals, according to a 2011 survey of 500 companies by the Corporate Executive Board Co., a research and advisory firm.

And increasing frequency may not make much of a difference if the performance appraisals are ineffective to begin with, say some. One academic review of more than 600 employee-feedback studies found that two-thirds of appraisals had zero or even negative effects on employee performance after the feedback was given. “Why is doing something stupid more often better than doing something stupid once a year?” asks Samuel A. Culbert, a professor at the Anderson School of Management at the University of California, Los Angeles and the co-author of the book “Get Rid of the Performance Review!”

Some firms have found that the traditional once-a-year review is so flooded with information—appraising past performance, setting future goals, discussing pay—that workers have trouble absorbing it all, and instead dwell on criticism without really hearing constructive ways they can improve.